GSA Leasing Head Signals Shift On Footprint Reduction Strategy
In the name of saving the government money, the General Services Administration, largely under the direction of recently departed public buildings commissioner Norman Dong, pursued an aggressive strategy to reduce the footprint of federal agencies. But now, as the agency transitions to the new administration and awaits its permanent nominations, one career official signaled a shift in that strategy to focus less on square footage and more on total cost.
GSA Public Building Service assistant commissioner for leasing Chris Wisner, speaking at Bisnow's Federal Properties Summit Thursday morning, said the initiative has succeeded in reducing total square footage of agencies, but that does not tell the whole story.
"What I caution, and where we are right now, is we may be taking actions to reduce square footages that actually cost the federal government more dollars," Wisner said. "We’re really trying to look at this in the total cost to the federal government. So what is the disruption to a customer agency if we pick them up and move them to a new space all in the name of reducing their square footages and getting that rent lower? That is a big question for us."
Wisner said office landlords should still expect an overall trend of square footage reduction from federal tenants, which he said makes logical sense and creates long-term efficiencies. But he said he has instructed his team to focus more on the disruption these moves cause for the agencies and look at the total cost to the government.
Wisner's comments did not go unnoticed by the government leasing brokers on the event's panel. CBRE executive vice president, and head of the firm's Federal Lessor Advisory Group (FLAG), Tim Hutchens said that hearing the GSA's head of leasing talking about total costs rather than pure square footage was a welcome sign of things to come.
"With the budget cuts that we’re seeing, we think that one good thing that could come out of this is a real focus on total cost," Hutchens said. "By being 20 SF more efficient are we actually saving money, or are we spending more money to get there?"
Transwestern executive vice president of its government services group Peter Marchin said he has seen the GSA shortening its lease terms for more flexibility in some deals, which ends up pushing up rents even if square footage is reduced.
"The GSA has to realize the amount of space is not the only indicator of what is going to be the cost," Marcin said. "If you can reduce the space but you go out there with a five-year term and a rolling term after five, you’re going to pay more for space. You need that certainty. That’s GSA's main selling point."
With many GSA employees in the audience, the leasing brokers took the opportunity to suggest other ways the agency can improve efficiency and make it easier to get deals done.
FD Stonewater founding partner Joseph Delogu said the agency should sit down and identify 10, 20 or even 25 rules that can be thrown overboard.
"The regulations are onerous," Delogu said. "The procedures we have to follow to get space into government occupancy are quite substantial ... Fewer rules and fewer instances of getting wrapped up in your rulebook would dramatically enhance efficiency."
Lincoln Property senior vice president Elaine Clancy, a former GSA director of leasing, said the agency can even be more creative about working within the rules it has to get deals done easier that make more long-term financial sense.
"Let's try running it almost like a private sector procurement," Clancy said. "Let's not worry about all the forms and let's try something a little creative and see if it breaks the system. I suspect that it doesn't and if they actually tried it they might find that it works."